Philanthropic giving that reflects your values
You’ve always given back throughout your life, so it’s only natural that you'd like to see some of your wealth help make a difference after you're gone. This likely means gifting a portion of your estate to a registered charity or a cause close to your heart. Here are some ways to leave your money in good hands.
Estate planning deals with distributing your assets according to your wishes, with an eye to minimizing taxes. Legacy planning focuses the emotional aspects of your wealth – and how it can benefit the causes and communities nearest and dearest to your heart.
When you’re planning your legacy, you should be certain to communicate your wishes to your family. Share your values, clearly explain how your wealth will be divided, and why. This allows them to understand your ideals and desires, accept them, and perhaps even make some suggestions themselves. Working together, your family may be able to help shape the future of your legacy and contribute in a meaningful way.
Your financial advisor will be a good source of information in formulating your legacy plan. They can tap into a network of legal professionals and community connections that you can consult and engage in the process.
Options for leaving a legacy
While you may not be Bill Gates with the resources to set up a global foundation or non-profit organization, there are a number of things you can do that will ensure you leave a legacy that has impact and meaning.
Charitable bequest in your will: This is the most straightforward way to make a gift and ensure it is distributed according to your wishes. Included in the value of your estate, it may increase probate and executor fees.
Real estate gift: You can leave property, buildings, land, or a home to charity in your will or while you're living. Your estate will receive a tax receipt which can be used to offset final taxes.
Life insurance beneficiary: By naming a charitable organization as a beneficiary of your life insurance policy, your estate also avoids taxes on the gift and, if structured properly, from the premiums paid. The organization will receive the proceeds upon your death.
Directly designated RRSPs, RRIFs, or TFSAs: Naming a charitable organization as a beneficiary of your retirement plan transfers the proceeds directly to the charity, bypassing probate. As well, your estate will receive a charitable tax receipt, which will help counterbalance any tax liabilities.
Charitable remainder trusts: You can name a charity as a secondary beneficiary after you and/or your spouse. During your lifetime you'll continue to receive income from the trust and the charity will receive the remainder after your death.
Annuity agreement: This is an arrangement you make with the charity where you give them cash or property in exchange for a guaranteed lifetime income (or a pre-defined period of time). Upon your death, they receive the remainder of your original contribution. If you start the annuity when you're between 75 and 90, you can receive the income tax-free. If you do it before that (65-74) you can receive a partial tax break.
Residual interest: This option enables you to leave the property you live in or other property you own, such as an art collection, to a named charity. You can continue to enjoy the property while you’re alive and receive a tax receipt for the value of the property at the time the gift was made. The charity receives the deed for the property upon your death.
Planning your legacy is a detailed process, benefitting from time and professional advice. Your financial advisor and team of specialists at BlueShore Financial can help ensure everything is in place, making sure your wealth and legacy will live on.
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Mirena Velikova Financial AdvisorMutual Funds Investment Specialist
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